HAVANT, United Kingdom,
July 1, 2013 /PRNewswire/ -- Xyratex
Ltd (Nasdaq: XRTX), a leading provider of data storage technology,
today announced results for the second fiscal quarter ended
May 31, 2013. Revenues for the second
quarter were $216.2 million, a
decrease of 33% compared to revenues of $322.1 million for the same period in the prior
year.
For the second quarter, GAAP net income was $2.9 million, or $0.11 per diluted share, compared to GAAP net
income of $7.0 million, or
$0.24 per diluted share, in the same
period last year. Non-GAAP net income was $2.7 million, or $0.10 per share, compared to non-GAAP net income
of $9.3 million, or $0.32 per diluted share, in the same quarter a
year ago(1).
Gross profit margin in the second quarter was 22.0%, compared to
16.5% in the same period last year and 18.9% in the prior quarter.
The increases from last year and the prior quarter primarily
reflect a favorable variation in product mix in both our Enterprise
Data Storage Solutions and Hard Disk Drive (HDD) Capital Equipment
product segments.
Today, the Company also announced that its Board of Directors
has approved a quarterly cash dividend of $0.075 per share, unchanged from the prior
quarter. The dividend will be payable on July 30, 2013 to shareholders of record as of the
close of business on July 15, 2013.
This dividend represents a quarterly payout of approximately
$2.1 million in aggregate, or
$8.4 million on an annualized
basis.
"After three months in the CEO position, my perspectives on the
important role Xyratex plays in the data storage market and the
significant opportunities for the Company in terms of future growth
have been confirmed for me. The capability and expertise that
Xyratex possesses to deliver storage technology that enables its
customers to be successful in their markets is proven, repeatable
and verifiable. I have conducted a detailed analysis of the
business with the Board, including our most recently appointed
Board members, Vadim Perelman and
Ken Traub, who represent our largest
investor, Baker Street Capital. Our core businesses of Capital
Equipment and Storage Solutions are both profitable and cash
generative. I am encouraged by the longer term opportunities for
growth in these businesses. The gradual revenue decline from our
previously largest customer NetApp will cease after 2014 and this
revenue is being replaced with new OEM business wins. With our new
ClusterStor product line, which addresses the HPC/Big Data
marketplace, we have achieved incremental design wins, added a
number of new customers in just the last 3 months and are on course
to meet our revenue target of $60m in
fiscal 2013. I am very encouraged that ClusterStor is approaching
the inflection point where, as revenue ramps year over year, the
product line can generate a positive contribution to the overall
business," said Ernie Sampias, CEO.
"I can also confirm that the Board is unanimously supportive of our
long-term growth strategy."
Business Outlook
The following statements are based on current expectations.
These statements are forward-looking, and actual results may differ
materially.
- Revenue in the third fiscal quarter of 2013 is projected to be
in the range of $195 million to $225
million.
- Fully diluted earnings (loss) per share is anticipated to be
between a loss of $0.16 and earnings
of $0.08 on a GAAP basis in the third
quarter. On a non-GAAP basis, fully diluted earnings (loss) per
share is anticipated to be between a loss of $0.04 and earnings of $0.20. Anticipated non-GAAP earnings (loss) per
share in our third quarter excludes amortization of intangible
assets, equity compensation expense, specified non-recurring items,
the related taxation expense and an additional tax expense of
approximately $2 million resulting
from a reduction in the deferred tax asset caused by a fall in U.K.
tax rates.
Conference Call Information
The company will host a conference call to discuss its results
at 1:30 p.m. PT/4:30 p.m. ET on Monday
July 1, 2013.
The conference call
can be accessed online via the company's website
www.xyratex.com/investors, or by telephone as follows:
|
United
States
|
(866)
270-6057
|
|
|
Outside the United
States
|
(617)
213-8891
|
|
|
Passcode
|
16554089
|
|
|
|
|
|
|
A replay will be
available via the company's website www.xyratex.com/investors, or
can be accessed by telephone through July 8, 2013 as
follows:
|
United
States
|
(888)
286-8010
|
|
|
Outside the United
States
|
(617)
801-6888
|
|
|
Passcode
|
510829919
|
|
|
(1) Non-GAAP net income (loss) and diluted earnings (loss) per
share exclude (a) amortization of intangible assets, (b) equity
compensation expense, (c) the tax effects related to (a) and (b)
and (d) the recognition of a Malaysia deferred tax asset in the first
quarter of fiscal 2012. Reconciliation of non-GAAP net income
(loss) and diluted earnings (loss) per share to GAAP net income
(loss) and GAAP diluted earnings (loss) per share is included in a
table immediately following the condensed consolidated statements
of cash flow.
The intention in providing these non-GAAP measures is to provide
supplemental information regarding the company's operational
performance while recognizing that they have material limitations
and that they should only be referred to with reference to, and not
considered to be a substitute for, or superior to, the
corresponding GAAP measure. The financial results calculated in
accordance with GAAP and reconciliations of these non-GAAP measures
to the comparable GAAP measures should be carefully evaluated. The
non-GAAP financial measures used by us may be calculated
differently from, and therefore may not be comparable to, similarly
titled measures used by other companies.
The company believes that the provision of these non-GAAP
financial measures is useful to investors and investment analysts
because it enables comparison to the company's historical operating
results, those of competitors and other industry participants and
also provides transparency to the measures used by management in
operational and financial decision making. In relation to the
specific items excluded: (a) intangible assets represent costs
incurred by the acquired business prior to acquisition, are not
cash costs and will not be replaced when the assets are fully
amortized and therefore the exclusion of these costs provides
management and investors with better visibility of the costs
required to generate revenue over time; (b) equity compensation
expense is non-cash in nature and is outside the control of
management during the period in which the expense is incurred, (c)
the exclusion of the related tax effects of excluding items (a) and
(b) is necessary to show the effect on net income (loss) of the
change in tax expense that would have been recorded if these items
had not been incurred and (d) the recognition of the Malaysia
deferred tax asset relates to the non-renewal of certain tax
incentive arrangements in 2012, is non-recurring and will reverse
if the incentive arrangements are renewed.
Safe Harbor Statement
This press release contains forward–looking statements. These
statements relate to future events or our future financial
performance, including our projected revenue and fully diluted
earnings (loss) per share data (on a GAAP and non-GAAP basis) for
the third quarter. These statements are only predictions and
involve known and unknown risks, uncertainties and other factors
that may cause our actual results, levels of activity, performance
or achievements to differ materially from any future results,
levels of activity, performance or achievements expressed or
implied by these forward-looking statements.
Factors that might cause such a difference include our inability
to retain major customers and meet the required technical and
performance specifications of our products in a timely manner or at
all, the cyclical nature of the markets in which we operate,
changes in our customers' volume requirements, our inability to
compete successfully in the competitive and rapidly changing
marketplace in which we operate, deterioration in global economic
conditions, diminished growth in the volume of digital information,
patent infringement claims and our inability to protect our
intellectual property and the impact of natural disasters. These
risks and other factors include those listed under "Risk Factors"
and elsewhere in our Annual Report on Form 20-F as filed with the
Securities and Exchange Commission (File No. 001-35766). In some
cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "expects," "intends," "plans,"
"anticipates," "believes," "estimates," "predicts," "projects,"
"potential," "continue," or the negative of these terms or other
comparable terminology. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements.
About Xyratex
Xyratex is a leading provider of data storage technology,
including modular solutions for the enterprise data storage
industry, and HDD capital equipment for the HDD industry. Xyratex
enterprise data storage platforms provide a range of advanced,
scalable data storage solutions for the Original Equipment
Manufacturer and High Performance Computing communities. As the
largest capital equipment supplier to the HDD industry, Xyratex
enables disk drive manufacturers and their component suppliers to
meet today's technology and productivity requirements. Xyratex has
over 25 years of experience in research and development relating to
disk drives, storage systems and manufacturing process
technology.
Founded in 1994 in an MBO from IBM, and with headquarters in the
UK, Xyratex has an established global base with R&D and
operational facilities in North
America, Asia and
Europe.
Website: www.xyratex.com
XYRATEX
LTD
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended,
|
|
Six Months
Ended,
|
|
|
|
May
31,
|
|
May
31,
|
|
May
31,
|
|
May
31,
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
(US dollars in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$ 216,185
|
|
$ 322,116
|
|
$ 411,782
|
|
$ 617,782
|
Cost of
revenues
|
168,652
|
|
268,841
|
|
327,315
|
|
511,468
|
Gross
profit
|
47,533
|
|
53,275
|
|
84,467
|
|
106,314
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Research and
development
|
25,786
|
|
27,255
|
|
50,195
|
|
51,923
|
|
Selling,
general and administrative
|
16,917
|
|
16,955
|
|
34,715
|
|
33,733
|
|
Restructuring
costs
|
1,742
|
|
-
|
|
1,742
|
|
-
|
|
Amortization of
intangible assets
|
556
|
|
950
|
|
1,048
|
|
1,920
|
|
|
Total operating
expenses
|
45,001
|
|
45,160
|
|
87,700
|
|
87,576
|
Operating income
(loss)
|
2,532
|
|
8,115
|
|
(3,233)
|
|
18,738
|
Interest income,
net
|
47
|
|
154
|
|
127
|
|
340
|
Income (loss) before
income taxes
|
2,579
|
|
8,269
|
|
(3,106)
|
|
19,078
|
Provision (benefit)
for income taxes
|
(366)
|
|
1,273
|
|
(916)
|
|
1,221
|
Net income
(loss)
|
$ 2,945
|
|
$ 6,996
|
|
$ (2,190)
|
|
$ 17,857
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
per share:
|
|
|
|
|
|
|
|
|
Basic
|
$ 0.11
|
|
$ 0.25
|
|
$ (0.08)
|
|
$ 0.64
|
|
Diluted
|
$ 0.11
|
|
$ 0.24
|
|
$ (0.08)
|
|
$ 0.62
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares (in thousands), used in
|
|
|
|
|
|
|
|
|
computing net
earnings (loss) per share:
|
|
|
|
|
|
|
|
|
Basic
|
27,558
|
|
28,099
|
|
27,380
|
|
27,927
|
|
Diluted
|
27,744
|
|
28,786
|
|
27,380
|
|
28,764
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per share
|
$ 0.08
|
|
$ 0.08
|
|
$ 2.15
|
|
$ 0.15
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss):
|
|
|
|
|
|
|
|
Net income
(loss)
|
$ 2,945
|
|
$ 6,996
|
|
$ (2,190)
|
|
$ 17,857
|
Unrealized gain
(loss) on forward foreign currency contract
|
182
|
|
(1,338)
|
|
(2,049)
|
|
(258)
|
Reclassification of
loss into net income (loss)
|
437
|
|
(86)
|
|
202
|
|
336
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive
income (loss)
|
$ 3,564
|
|
$ 5,572
|
|
$ (4,037)
|
|
$ 17,935
|
XYRATEX
LTD
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May
31,
|
|
November
30,
|
|
|
|
2013
|
|
2012
|
|
|
|
(US dollars and
amounts in thousands)
|
|
|
|
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$ 84,864
|
|
$ 117,174
|
|
Accounts receivable,
net
|
120,245
|
|
132,917
|
|
Inventories
|
156,515
|
|
171,605
|
|
Prepaid
expenses
|
3,677
|
|
3,134
|
|
Deferred income
taxes
|
205
|
|
228
|
|
Other current
assets
|
6,078
|
|
7,121
|
|
|
Total current
assets
|
371,584
|
|
432,179
|
|
Property, plant and
equipment, net
|
40,392
|
|
40,194
|
|
Intangible assets,
net
|
15,282
|
|
14,975
|
|
Deferred income
taxes
|
25,969
|
|
23,929
|
|
|
Total
assets
|
$
453,227
|
|
$
511,277
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$ 92,535
|
|
$ 82,125
|
|
Employee compensation
and benefits payable
|
16,118
|
|
17,961
|
|
Deferred
revenue
|
11,040
|
|
18,521
|
|
Income taxes
payable
|
33
|
|
369
|
|
Other accrued
liabilities
|
20,437
|
|
17,767
|
|
|
Total current
liabilities
|
140,163
|
|
136,743
|
|
Long-term
debt
|
-
|
|
-
|
|
|
Total
liabilities
|
$
140,163
|
|
$
136,743
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
Common shares (in
thousands), par value $0.01 per share
|
|
|
|
|
|
70,000 authorized,
27,558 and 27,024 issued and outstanding
|
$ 276
|
|
$ 270
|
|
Additional paid-in
capital
|
312,661
|
|
354,593
|
|
Accumulated other
comprehensive income (deficit)
|
(984)
|
|
863
|
|
Accumulated
income
|
1,111
|
|
18,808
|
|
|
Total
shareholders' equity
|
313,064
|
|
374,534
|
|
|
Total liabilities
and shareholders' equity
|
$
453,227
|
|
$
511,277
|
XYRATEX
LTD
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended,
|
|
|
|
May
31,
|
|
May
31,
|
|
|
|
2013
|
|
2012
|
|
|
|
(US dollars
in thousands)
|
Cash flows from
operating activities:
|
|
|
|
Net income
(loss)
|
$ (2,190)
|
|
$ 17,857
|
Adjustments to
reconcile net income (loss) to net cash
|
|
|
|
|
provided by operating
activities:
|
|
|
|
Depreciation
|
8,023
|
|
8,290
|
Amortization of
intangible assets
|
1,048
|
|
1,920
|
Non-cash equity
compensation
|
672
|
|
3,845
|
Loss on sale of
assets
|
-
|
|
1,157
|
Deferred income
taxes
|
(1,426)
|
|
(297)
|
Changes in assets and
liabilities, net of impact of acquisitions and
divestitures:
|
|
|
|
|
Accounts
receivable
|
12,672
|
|
37,147
|
|
Inventories
|
15,090
|
|
(16,160)
|
|
Prepaid expenses and
other current assets
|
(651)
|
|
(2,382)
|
|
Accounts
payable
|
10,410
|
|
(33,425)
|
|
Employee compensation
and benefits payable
|
(1,843)
|
|
(7,256)
|
|
Deferred
revenue
|
(7,481)
|
|
7,601
|
|
Income taxes
payable
|
(336)
|
|
964
|
|
Other accrued
liabilities
|
1,383
|
|
(1,231)
|
|
|
Net cash provided by
operating activities
|
35,371
|
|
18,030
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Investments in
property, plant and equipment
|
(8,221)
|
|
(6,964)
|
|
Payment for
acquisition of intangible assets
|
(1,355)
|
|
(3,500)
|
|
|
Net cash used in
investing activities
|
(9,576)
|
|
(10,464)
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from
issuance of shares
|
-
|
|
601
|
|
Repurchase of
shares
|
-
|
|
(3,574)
|
|
Dividends to
shareholders
|
(58,105)
|
|
(5,471)
|
|
|
Net cash used in
financing activities
|
(58,105)
|
|
(8,444)
|
Change in cash and
cash equivalents
|
(32,310)
|
|
(878)
|
Cash and cash
equivalents at beginning of period
|
117,174
|
|
132,630
|
Cash and cash
equivalents at end of period
|
$ 84,864
|
|
$ 131,752
|
|
|
|
|
|
|
XYRATEX
LTD
|
SUPPLEMENTAL
INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
May
31,
|
|
May
31,
|
|
May
31,
|
|
May
31,
|
Summary
Reconciliation Of GAAP Net Income (Loss) To Non-GAAP Net Income
(Loss)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
(US dollars in
thousands, except per share amounts)
|
|
(US dollars in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss)
|
$ 2,945
|
|
$ 6,996
|
|
$ (2,190)
|
|
$ 17,857
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets
|
556
|
|
950
|
|
1,048
|
|
1,920
|
|
Equity
compensation
|
(860)
|
|
2,132
|
|
672
|
|
3,845
|
|
Tax effect of above
non-GAAP adjustments
|
70
|
|
(771)
|
|
(396)
|
|
(1,442)
|
|
Malaysia deferred tax
asset recognized
|
-
|
|
-
|
|
-
|
|
(1,489)
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income
(loss)
|
$ 2,711
|
|
$ 9,307
|
|
$ (866)
|
|
$ 20,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary
Reconciliation Of Diluted GAAP Earnings (Loss) Per Share To Diluted
Non-GAAP Earnings (Loss) Per Share
|
|
|
|
|
|
|
|
|
|
|
|
Diluted GAAP earnings
(loss) per share
|
$ 0.11
|
|
$ 0.24
|
|
$ (0.08)
|
|
$ 0.62
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets
|
0.02
|
|
0.03
|
|
0.04
|
|
0.07
|
|
Equity
compensation
|
(0.03)
|
|
0.07
|
|
0.02
|
|
0.13
|
|
Tax effect of above
non-GAAP adjustments
|
0.00
|
|
(0.03)
|
|
(0.01)
|
|
(0.05)
|
|
Malaysia deferred tax
asset recognized
|
-
|
|
-
|
|
-
|
|
(0.05)
|
|
|
|
|
|
|
|
|
|
Diluted non-GAAP
earnings (loss) per share
|
$ 0.10
|
|
$ 0.32
|
|
$ (0.03)
|
|
$ 0.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmental
Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Enterprise Data
Storage Solutions
|
$ 169,342
|
|
$ 278,459
|
|
$ 345,888
|
|
$ 550,528
|
|
HDD Capital
Equipment
|
46,843
|
|
43,657
|
|
65,894
|
|
67,254
|
|
Total
|
$ 216,185
|
|
$ 322,116
|
|
$ 411,782
|
|
$ 617,782
|
|
|
|
|
|
|
|
|
|
Gross
profit:
|
|
|
|
|
|
|
|
|
Enterprise Data
Storage Solutions
|
$31,463
|
|
$45,356
|
|
$62,994
|
|
$92,469
|
|
HDD Capital
Equipment
|
16,025
|
|
8,278
|
|
21,533
|
|
14,305
|
|
Equity
compensation
|
45
|
|
(359)
|
|
(60)
|
|
(460)
|
|
Total
|
$47,533
|
|
$53,275
|
|
$84,467
|
|
$106,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary Of Equity
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
$ (45)
|
|
$359
|
|
$60
|
|
$460
|
|
Research and
development
|
(381)
|
|
713
|
|
79
|
|
1,375
|
|
Selling, general and
administrative
|
(434)
|
|
1,060
|
|
533
|
|
2,010
|
|
|
|
|
|
|
|
|
|
|
Total equity
compensation
|
$ (860)
|
|
$2,132
|
|
$672
|
|
$3,845
|
SOURCE Xyratex Ltd